The FTC said Monday it would impose penalties of a total of 25 billion won ($22 million) on LS Corp. and its affiliates, and report six owner family members to the prosecution.
“We decided to impose penalties and report the management to prosecutors after we found the former LS Cable & System (currently LS Corp.) directly ordered LS-Nikko Copper to unfairly support LS Global,” said a FTC spokesperson.
The penalties of 25 billion won include 11.1 billion won for LS Corp., 10.3 billion won for LS-Nikko Copper, 3 billion won for LS Cable & System and 1.4 billion won for LS Global.
Members of the management to be reported to prosecutors are LS Cable & System Chairman Koo Cha-yub, CEO Myung Roh-hyun, LS-Nikko Copper Chairman Koo Ja-hong, Vice President Koo Ja-eun, CEO Doh Seok-koo and Vice President Jun Seung-jae.
According to the FTC, the former LS Cable & System established LS Global in December 2005 through joint investments from its owner family.
LS Global was then designed to act as an intermediary firm so other affiliates had to go through it when they sold or bought electrolytic copper, which is a key business item for most affiliates, and pay transit duties to LS Global.
Through the process, LS Global had earned about 19.7 billion won, mainly from LS-Nikko Copper and LS Cable & System from 2006 to date.
During the period, 12 owner family members also pocketed a total of 9.3 billion won by selling off entire stocks of LS Global to LS Corp. with a 1,900 percent rate of return.
On the same day, however, LS Corp. released a statement, saying it would take legal action against the FTC.
“It is excessive for the FTC to report a number of members of the management to prosecutors for cases whose illegality is uncertain,” said a spokesperson of LS Corp.
It said LS Global was set up to stably and efficiently supply electrolytic copper to the group’s affiliates and both supplier (LS-Nikko Copper) and demanding companies (three companies including LS Cable & System) have benefited from normal transactions.
By Shin Ji-hye (email@example.com)